Question 1

Which of the following best describes the term limited liability? If the business fails:

Accepted Answer

The owner only loses the amount invested in the business

Answer

Personal possessions of the owner can be taken to pay any debts

Answer

There is no limit on the amount the owner has to pay to settle debts

Answer

The owner is personally liable for all the debts of the business

Question 2

Which type of legal structure is used when two or more people join together to start a business and have unlimited liability?

Accepted Answer

Partnership

Answer

Sole trader

Answer

Private limited company

Answer

Public limited company

Question 3

What are the owners of private and public limited companies called?

Accepted Answer

Shareholders

Answer

Board of directors

Answer

Managers

Answer

Stakeholders

Question 4

Which of the following is an advantage of operating a large established business as a public limited company?

Accepted Answer

Shares can be sold to the public to raise additional finance

Answer

Owners have unlimited liability

Answer

Financial accounts are published

Answer

Shares can only be sold to invited investors to raise finance

Question 5

Which of the following is a drawback for an entrepreneur setting up a business as a sole trader?

Accepted Answer

Unlimited liability

Answer

Profit is shared

Answer

Limited liability

Answer

Financial accounts are kept private

Question 6

Which of the following is a disadvantage of setting up a business as a partnership?

Accepted Answer

Shared profit

Answer

More ideas generated

Answer

Shared losses

Answer

Shared workload

Question 7

Which of the following types of business can advertise shares for sale to the general public?

Accepted Answer

Public limited company

Answer

Partnership

Answer

Private limited company

Answer

Sole trader

Question 8

A private limited company may change into a public limited company because it wants:

Accepted Answer

To raise additional finance

Answer

To avoid takeover

Answer

Unlimited liability

Answer

Limited liability

Question 9

Which of the following would be classed as a not-for-profit organisation?

Accepted Answer

OXFAM

Answer

H&M

Answer

EE

Answer

M&S

Question 10

Which of the following is a disadvantage of being a private limited company?

Accepted Answer

A summary of the business’s accounts can be viewed by the public

Answer

Shareholders’ personal possessions cannot be taken to pay any debts

Answer

It has a separate legal identity and therefore continuity

Answer

Control is kept over who buys shares in the company

Question 11

Which of the following is an advantage of a business operating as a partnership over a sole trader?

Accepted Answer

Shared responsibility

Answer

Profits are shared

Answer

Financial accounts are kept private

Answer

Unlimited liability

Question 12

Which of the following legal structures can sell shares on the stock market?

Accepted Answer

Public limited company

Answer

Sole trader

Answer

Partnership

Answer

Private limited company

Question 13

Which of the following statements is always true of a public limited company?

Accepted Answer

Liability is limited

Answer

Shareholders have day to day control of the company

Answer

The ability to expand is limited

Answer

Board of directors own the business

Question 14

Which legal structure would an individual wishing to start-up a small business choose because it is quick, easy and inexpensive to set up?

Accepted Answer

Sole trader

Answer

Partnership

Answer

Public limited company

Answer

Private limited company

Question 15

Which of the following is a disadvantage of being a public limited company?

Accepted Answer

The business is at risk of takeover

Answer

Unlimited liability

Answer

Large sums of money can be raised

Answer

Limited liability

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